South Africa's National Roads Agency, 1998

INCREASING TRANSPARENCY AND IMPROVING PROJECT MANAGEMENT: SOUTH AFRICA’S NATIONAL ROADS AGENCY, 1998 – 2011

SYNOPSIS Following the transition to democracy in 1994, South Africa experimented with ways to improve ministry effectiveness by separating policy-making functions from operations. The Department of Transport introduced principles of New Public Management and public-private partnerships to improve service delivery. The South African National Roads Agency Ltd. (SANRAL), led by Nazir Alli, reconfigured the procurement process and financing models for planning, design, construction, maintenance and operation of the country’s national road network. Increasing transparency in the tendering of contracts led to greater accountability on the part of project managers and contractors. This case study chronicles the steps that Alli and his staff took to build the agency and to deliver results on a large scale, culminating with the upgrade of the freeway connecting the cities of Johannesburg and Pretoria during the final months before the 2010 FIFA World Cup.

Richard Bennet drafted this case study based on interviews conducted in Pretoria and Cape Town, South Africa, in March 2011.

INTRODUCTION (SANRAL) at the time, recalled, “For all of us In the months leading up to the 2010 in South Africa, it was at the moment again FIFA World Cup, South Africa braced itself like April 1994 [when Nelson Mandela was for an influx of visitors from around the world. elected president]. …There was this huge Construction workers scrambled to finish enthusiasm to say we know we can do it, and major infrastructure upgrades, including the we’ve got to deliver. … Everybody pulled their first part of the Gauteng Freeway weight to make sure that we met those Improvement Project, an upgrade of the roads milestones.” The first phase of the project connecting the cities of Johannesburg and highlighted SANRAL’s ability to renovate and Pretoria. Officials predicted that traffic would upgrade 185 kilometers of national roads. The be especially heavy during the World Cup as undertaking was the largest toll-financed road visitors drove between the cities and to and project in the world at the time. It was also a from the international airport. test for a new agency that sought to create a Nazir Alli, who was chief executive of the more efficient and effective road transportation South African National Roads Agency Ltd. system for South Africa. In 1998, the Roads

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Department, previously an arm of the people recognized the crucial role that Department of Transport, became SANRAL, transport plays in the growth of the economy an independent agency. Guided by the and in social development.” principles of New Public Management that Earlier governments had underfunded sought to introduce the logic of private sector road construction and maintenance, especially business management into government in rural areas. Road traffic had grown at a rate operations, SANRAL was responsible for the of 3% per year during the previous 20 years, development and maintenance of what was but the government had failed to make any then a 7,000-kilometer national road network. concerted efforts to expand the network and Although the Gauteng Freeway project was accommodate that growth. In the mid-1990s, significant for its size, the principles of 80%-90% of the country’s passenger and management were consistent with all of the freight transport traveled on roads, and driving agency’s projects. from rural communities to economic centers This case study charts the initial steps was difficult and time-consuming. that Alli and his team took to set up Maharaj wanted to repair and expand the SANRAL, transform the tendering process, road network, but several obstacles stood in and reform the methods through which South the way. Under earlier governments, Africa developed its national road network. corporations had paid bribes to win political favors and tenders, and to bypass regulations. THE CHALLENGE Although a South African Roads Board had With the transition to majority rule in existed since the 1930s, the board did not 1994, the newly elected government of South always address the needs of the population or Africa inherited myriad transportation consider good governance a priority. In theory, problems. Under the apartheid system of the board, whose members came from business racial segregation, housing policies had located as well as government, was independent. black townships far from economic centers. However, the chairman of the board was the Public-transit systems ran only during limited director general of transport, the Department hours to limited locations, making it difficult of Transport’s chief civil servant. The director for those in geographically remote townships to general was also responsible for carrying out hold jobs in the cities or to even look for the minister’s agenda. The structure created a employment. Improvements to the national continuing conflict of interest, according to road network would increase economic Alli. “So whom did the chief director listen to? development opportunities for large segments To the Roads Board? If the DG [director of the country’s population. general] has a difference of opinion from his The minister of transport, Mac Maharaj, Roads Board, [and he] gets his minister to believed that transportation was a agree with him, then we ignore the Roads fundamental pillar of development. Maharaj, Board. So there was no accountability,” Alli a leader in the anti-apartheid struggle, recalled. recognized that improvements in Poor coordination between the provinces transportation were vital if historically and the central government exacerbated disenfranchised segments of South Africa’s maintenance problems. Alli said, “The population were to participate in the country’s provinces used to be responsible for the economic growth. Alli shared the conviction. maintenance of our roads. There was no “Prior to 1994, transport was always there on accountability at all, none whatsoever. When the side,” Alli said. “That changed when we asked the provinces one time to show us

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where they spent our money, on which The commission’s review process brought portions of our roads, they couldn’t even show together people from the transportation us that.” industry, the government and the academic community to examine the role that the FRAMING A RESPONSE department played in service provision. Alli, trained as an engineer, had Representatives from municipal, provincial experience in engineering consulting and had and national levels of government met with participated in the working group that taxi associations, workers’ unions, consulting developed the Reconstruction and firms, government lawyers and university Development Programme, South Africa’s scholars to evaluate the ways that the broad framework for socio-economic reform Department of Transport could adapt to meet after the end of apartheid. He had joined the the challenges of a democratic South Africa. Department of Transport as chief director of More than 300 organizations participated in roads in 1995. Maharaj led the initiative to the review process. Maharaj, reflecting on the review and alter the department’s resulting White Paper on National Transport configuration and responsibilities, which Policy, noted, “We critically looked at what included spinning off several areas, including was assumed to be the role of the state and national roads, into agencies and shrinking the found that many areas of activities could be department’s workforce to 250 employees from more effectively done if there was a direct 1,400 during the next few years. For national relationship between the providers and the roads, Alli would be the individual to carry out users.”1 the needed reforms. As part of the review, a group from the In early 1995, Maharaj commissioned a Roads Department visited other countries to study of South Africa’s transportation policy. learn from others’ experiences. The director The department historically had operated and general of transport, Ketso Gordhan, administered national roads, financing accompanied Alli to New Zealand, which had construction and maintenance through general undergone major transport reforms in the late obligation government bonds. By 1994, a 1980s, employing New Public Management government-wide budget deficit of 5.1% (NPM) principles to separate the demonstrated the need to find new models for government’s policy making and regulatory managing the financing of roads. The functions from its implementation and delivery government sought to expand infrastructure functions. The New Zealand model, known as and services to the majority of the population Transit New Zealand, sought to introduce the that had not received equal access under logic of private sector management into public apartheid but did not want to burden itself or sector operations. Founded in 1989, Transit risk insolvency by issuing more debt. New Zealand was governed by a board of Additional toll roads were an attractive option, directors. It featured the outsourcing of key as the funds collected from drivers—the users functions to private and semiprivate companies of the roads—could cover the interest to improve efficiency and reduce costs, while payments on revenue bonds. Because they emphasizing outcomes in service delivery, the produced income, toll roads would attract introduction of competition through the private investors, increasing opportunities for tendering of contracts, and the removal of partnerships with the private sector and hierarchical structures in favor of empowered relieving the government of the responsibility middle managers. for backing the financing.

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Gordhan and Alli wrote a proposal based They would separate several functions from on their findings in New Zealand. Gordhan the department, establishing agencies that noted, “We copied New Zealand, with one operated with greater autonomy but under the major difference. In New Zealand there were oversight of a board of directors. Some of Alli’s no toll roads. They were not mobilizing team argued that other organizations in the private capital for public infrastructure. roads industry should have representation on Theirs was about an efficient allocation the board. Alli and Maharaj settled on a system. Ours was about an efficient allocation smaller board without formal representation system and raising capital.” from organizations like taxi associations and Based on industry consultations and what trade unions. “The final decision was to say, they had learned from New Zealand’s model, no, what we need on the board are people who Gordhan and Alli proposed that taxpayers have skills, experience and knowledge about should not directly fund the construction and the business,” Alli said. “Because when you maintenance of roads. “We looked at how have vested interests sitting on the board, you roads were being managed,” Gordhan said. never reach a decision.” “The principle we looked at in transport said Following the publication of the White that where there is a user, the user should Paper on National Transport Policy in 1996, pay.” They proposed a fuel levy to fund Maharaj began the realignment by focusing on operating costs, but the Ministry of Finance four sections of the Department of Transport: rejected the idea because of worries about those in charge of national roads, cross-border political fallout from an increase in gasoline travel, and the aviation and maritime sectors. prices. Under a final agreement, all South Each of the four would become a distinct African taxpayers would share in the cost of agency. During Maharaj’s five years as building and maintaining non-toll roads. But minister of transport, he shifted many of the new toll roads would be financed entirely by department’s delivery-related responsibilities the sale of bonds that would be backed by to agencies in accordance with the New Public payments from the drivers who used the roads. Management approach to governance. The Though the new financing model would avoid department would cease to be the operator burdening all taxpayers, the organizers knew and administrator, and would become a leaner, the toll system might draw complaints from policy-focused, strategic planning and some drivers. The Department of Transport regulating body. Gordhan explained, “We concluded that drivers would be willing to pay were focused on creating an optimal model for better roads and faster commutes, but that where policy, regulation and operations should local consultation would be needed to ensure be three very distinct activities.” For the public support. national roads network, the Department of In addition to financing, the review Transport would retain responsibility over process sought to clarify the role of the Roads policy and some regulation, but a new agency, Board. Alli noted that the team looked at SANRAL, would take over responsibility for roads departments in New Zealand, Australia, financing, management, development and Canada, the Philippines, Malaysia and the maintenance. United Kingdom to help answer questions about the size and representation of the board. GETTING DOWN TO WORK Maharaj, Gordhan and Alli concluded that Several initial steps were necessary to structural realignment could improve the realize the vision that Maharaj, Gordhan and department’s efficiency and effectiveness. Alli had for SANRAL. They would need to

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lobby for the legislation that would enable the treasury. … There is always conflict between transfer to occur, staff the new agency and the different departments and national build support within the roads industry for treasury in terms of what your allocation these changes. They would then need to should be. Because we had somebody from implement models for financing, tendering and [the Ministry of Finance] sitting on our board, project management so that they could begin there was a better understanding of what our to expand the capacity of South Africa’s road business was all about without us having to network. keep on justifying over and over again to people who didn’t have intimate knowledge of the Enabling legislation and new responsibilities agency. That was the big advantage.” Following the review process, Maharaj lobbied Parliament to pass legislation that Staffing the agency would formalize changes to the department’s In the months that followed the April role. In April 1998, Act No. 7 established 1998 legislation, Alli worked to persuade key SANRAL as a public corporation. The members of his Roads Department staff to legislation stipulated that the agency would leave their government jobs and follow him to function as a statutory company operating the new agency. “We identified those who had along commercial principles under the a passion for this change,” Alli said. “We had leadership of a chief executive who reported to those internal champions, and we convinced a board of directors. But the department 91 people to join.” The staff would shrink to would retain control and oversight over the 92, including Alli, from 330. The agency agency as the sole shareholder. “We were would hire outside contractors and consultants splitting the policy maker from the to carry out many of the former department’s implementer,” Alli said. Maharaj’s approach core functions, such as conducting land granted the new agency greater autonomy in surveys, design consulting, and road its organization and operations under the monitoring and maintenance. supervision and guidance of an oversight board. Alli decided that the department would The minister of transport could appoint give all staff members the choice to stay in the seven of the eight SANRAL board members, department in another capacity, join the but a civil servant would no longer chair the agency, or, in cases where the agency planned proceedings, as had been the case in the past to contract out a particular function, the with the director general of transport. The agency would help specialists start or join eighth board member represented the existing small, privately-run businesses under Ministry of Finance. The decision to separate certain non-negotiable conditions. The agency the board’s policy-making functions from the would guarantee these small businesses work agency’s implementation functions reduced for two years, along with salary and benefits for potential conflicts of interest and reinforced the former employees at the levels they had the importance of the board as a mechanism enjoyed when working for the department. for oversight and guidance. “There would be The former employees would also receive no [direct] representation from the minister of training and financial consultation at the transport,” Alli said. “We didn’t need a expense of the agency, as many were engineers policeman from [the minister’s office] to be with no experience in private business. After sitting on the board. But I think one of the two years, the employees and their firms could smartest things we did was we reserved one enter into the tendering process seat for … somebody from the national independently. The process created a new

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market for functions that had been the within government. … We consulted very government’s. broadly [among industry organizations] and For many of the civil servants in the took their views into consideration about what department, joining the new agency was an this agency should be for South Africa.” uncertain step. “Ninety-two of us resigned With his staff in place and the minister of from the Department of Transport. It was a transport having selected the board of huge leap of faith,” Alli said. “Not by me; I directors, Alli and his team moved to overhaul had just joined [the department] in 1995. But the financial model for the new agency while the 91 people who joined me, for them I also reforming ethical standards for thought it was a huge leap of faith because procurement and project management. there was a certain set of safeguards that they had in benefits as being civil servants which Assets and financing suddenly were not there, because now we were When SANRAL’s founding act going to run this agency on commercial lines.” transferred the Roads Department’s assets to Alli guaranteed that the agency would not fire the new agency in 1998, the balance sheet did any employees during the first two years, and not reflect the maintenance needs of the road that although performance-based salary network. Inge Mulder, SANRAL’s chief adjustments would replace the fixed financial officer, described the initial balance adjustments that civil servants enjoyed, for the sheet as insolvent, as liabilities far exceeded first two years the minimum salary assets. The cost of addressing the backlog of adjustments would be the same as the needed road maintenance was more than three employees would have received at the times the annual allocation from the national department. treasury. One of the first challenges for the Gordhan said he understood the staff’s young agency came when the independent initial reluctance. “Nobody likes change, auditor general’s office issued a disclaimer nobody likes uncertainty,” he said. “We talked stating that SANRAL needed to create an and we persuaded and cajoled up to a point, accurate list of its property holdings. and then we just did it.” Though many were Historically, the government simply would skeptical of the changes, within a year, those declare its intent to build a road on a stretch of who outperformed the standard salary land, buying from private landowners if adjustment realized the benefits of necessary. But many of these deals had been performance-based evaluation. Alli recalled, made over the course of several generations, “Those who would have got the 5% salary and government records for the transactions adjustment suddenly started to get 5.5% and often did not exist. SANRAL’s founding said, ‘Wow, my performance has been legislation stipulated that the agency needed recognized.’” to prove that it owned the land on which its Alli and his team also needed to reach out roads were built. Accounting for its assets and to other organizations in the roads industry to building a realistic balance sheet would be build support for the changes. The support of critical as the agency moved to issue bonds for workers’ unions, taxi associations, and new toll road construction. construction companies were important to a The agency hired teams of property smooth transition. “It was a very wide and evaluators and land surveyors to prove that the broad consultation that had taken place; it was government had paid for its properties and to very intense,” Alli said. “There was a lot of establish the value of the landholdings. Many enthusiasm for transformation to take place of the surveyors and evaluators were people

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who had performed similar functions with the request for the coming fiscal year alone, the Department of Transport but had entered the agency worked three years in advance, allowing private sector under the program that for greater strategic planning. SANRAL’s guaranteed their new small businesses work independent status also allowed it to have a over the first several years. The process took separate allocation from the rest of the several additional years to complete and Department of Transport. In the past, after expanded as the national road network grew. the national treasury allocated money to the SANRAL oversaw both the toll and non- department, departmental sectors had fought toll roads in South Africa’s national network. for pieces of the grant. Planning for large road In all financial matters, the two sides of the projects became difficult if the department agency’s responsibilities carried separate decided to transfer money to rail or maritime balance sheets. projects midway through the procurement South Africa had a history of toll roads phase. The independence of the agency that dated back to the 18th century, but it allowed Alli and his team to plan strategically was not until the early 1980s that the country and reduced the uncertainty associated with established its first modern toll road. As government funding. government funding in the late 1990s fell short of what was needed to build and maintain the A new model for project management new roads necessary for growth, it became Alli wanted to increase accountability at clear that more tolling offered a solution. In every stage of the procurement process in order accordance with the 1998 legislation, to improve efficiency. Central to his strategy SANRAL funded the building of toll roads was increased autonomy for individuals within through the issuance of bonds, with the the agency and transparency across SANRAL’s principal and interest paid by toll revenues. business. When he arrived as chief director of The government guaranteed up to six billion roads in 1995, Alli had taken a tough line on rand (US$871 million) of borrowing for the toll issues of ethics and propriety. It had been roads, and all such borrowing required common, for instance, for hired consultants to approval of the ministers of transport and take the chief director and senior staff on finance. In addition to the publicly operated vacations. Upon discovering that a colleague toll roads, SANRAL also managed the was taking such a holiday, Alli told him that contracts for private, concession-run toll roads. such favors were no longer acceptable. “I Many operated on the so-called “build, stopped all of that nonsense,” Alli said. “Word operate, and transfer” model, where a private got around very, very quickly in the street: company received a concession from the Don’t offer these guys holidays or anything of agency to finance and build a toll road, and that sort again. We don’t take trips from operate it for 30 years. At the end of that consulting engineers. We don’t take trips from period, ownership reverted to the government. contractors.” When he became chief executive Non-toll roads received funding from of SANRAL, Alli carried over these stringent treasury allocations. Simultaneous to the rules and built them into the agency’s establishment of SANRAL, the government corporate culture. He set up anti-fraud also created the medium-term expenditure hotlines for internal and external reporting on framework (MTEF) that increased the any suspicions of collusion or corruption. duration of grants for those allocations that Substantive reports were investigated. required longer lead times and consistent Given SANRAL’s reliance on the sale of funding. Instead of justifying the budget bonds in financial markets, it was important to

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build trust in the new agency’s corporate with government’s policies designed to address governance. Alli emphasized the disclosure of historical inequalities in the wake of apartheid, performance information, review and analysis the agency emphasized what Alli described as of financial and performance management, and “social and entrepreneurial development” appropriate actions for noncompliance and throughout the procurement process. underperformance. SANRAL set aside 80% of the maintenance Alli knew that SANRAL had to bolster work for micro, small, and medium-size its ability to manage the tendering process for enterprises, with at least 90% of that work roadwork in order to increase effectiveness and reserved for businesses run by non-whites. build credibility and legitimacy. Jeremy “Our emphasis was on the skills development Cronin, the deputy minister of transport with a bias toward the historically noted, “An absolutely critical skill—and one disadvantaged or disenfranchised,” Alli said. that is so lacking in government—is the ability “We wanted to develop the pool of civil to enter contracts and to project-manage.” engineering construction contractors in South Alli surveyed best practices for tendering Africa. … These are small companies and they processes from around the world and drafted a are generally owned with no politically- new set of tender rules. “We had nothing to connected people.” SANRAL made a practice hide,” Alli said. “We went to the industry, to of pairing small contractors with larger the construction contractors and the design contractors. Given that some of the small engineers. We went to the industry at large companies could not afford many of the costs and asked them for their comment on our involved with large construction projects, such tender rules.” All tenders would be opened in as insurance, partnerships with larger firms public, reducing possibilities for collusion. allowed the smaller businesses to develop. “Everything we do is guided by good Alli also reorganized the flow of project governance practice,” said Alice Mathew, management. Rather than arranging SANRAL’s company secretary and risk officer. departments hierarchically, he worked with his “We are an implementing arm of the staff to create clusters of employees with government and we handle large amounts of expertise or experience in particular fields. money, which are taxpayer funds or tolls The new organizational structure was flatter, collected from the road user, and we have a decentralizing authority to project managers in responsibility to the nation that we handle a manner that reduced bureaucratic lag times that money correctly.” and increased efficiency. The clusters helped The tendering process was revised to to develop policy and managed problems improve transparency, bolstering associated with their areas of competency. For accountability and reducing opportunities for example, the design and construction cluster collusion. An independent evaluation would meet separately from the toll cluster committee comprising the project manager and the maintenance cluster, though they and representatives from the private sector most likely shared several staff members. evaluated bids based on functionality and SANRAL operated in accordance with the price. From the evaluation report produced, government’s hiring policies of black economic the proposal went through several different empowerment; by avoiding hierarchy, the offices for recommendations and improvements cluster system provided a collaborative way to before submission to the board of directors’ reduce potential challenges as new project contracts committee, which was responsible managers paired with more experienced for making the formal award. In accordance engineers. Mentoring facilitated the transfer

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of skills between staff members and provided midst of major construction during the event. an avenue to monitor performance in the The decision centered on whether SANRAL flattened structure. could substantially complete such a large Under the new process, small groups of project in such a short period of time. Van engineers from among the staff received Niekerk outlined the various stages of the assignments to manage particular projects. project for Alli and initially told him that time The managers then stayed with their projects was too short. Ultimately, they decided to through each phase of the procurement move ahead with the project, setting process, rather than handing the project from milestones for each contract to reach by the section to section. By seeing the project summer of 2010. Van Niekerk explained, “We through from start to finish, managers were all saw the World Cup as an opportunity to able to solve problems faster and reduce gain further momentum for this much needed bureaucratic lag times. project. Although the GFIP [Gauteng Freeway Improvement Project] was not a OVERCOMING OBSTACLES World Cup project, and since this project was The Gauteng Freeway Improvement required to be implemented in any case, the Project provided a major test of SANRAL’s World Cup was a big incentive to accelerate procurement process under trying conditions. this project in order to have the benefits of the Alex van Niekerk, a young engineer who project for the 2010 World Cup.” worked on tolling and traffic modeling for the Van Niekerk won approval for the project agency, had written memos to Alli since 2001 through the Department of Transport, a about the need to upgrade freeways in process that included appeals to politicians Gauteng Province, particularly the routes whose constituencies might be affected by connecting Johannesburg and Pretoria. both construction and the collection of tolls. Though many of the roads were in relatively The minister of transport at the time, Jeff good condition, they required significant Radebe, lent his political support to the expansion to handle additional traffic. Given project. "I have said on numerous occasions the size of the project, estimated costs that roads are the veins and arteries of our exceeded the budget allocation from the country's economy,” Radebe said in 2008. central government for non-toll roads. Van “The congestion on the freeways around Niekerk designed a preliminary model that Gauteng are inhibiting economic growth and used tolling to fund the upgrades. “We development, and this heart bypass for realized that we are at the point where we Gauteng will enable the economic hub of the require an intervention. We need to climb in, subcontinent to grow without the hindrance of upgrade the Gauteng freeway network, and poor traffic management."2 Because the have a vision for the future,” van Niekerk said. network connected to major provincial roads, During the summer of 2004, when South the Gauteng provincial government Africa won its bid to host the 2010 World approached the agency and asked to Cup, Alli and van Niekerk had to make a incorporate the R21 highway into the freeway decision on whether to move ahead with the project. The R21 connected the cities to the Gauteng freeway upgrade. The project was international airport and was in bad need of not a World Cup project, as the planners repair. Because the road often had lane projected that successive stages of the restrictions and closures, drivers frequently upgrades would continue well past the 2010 missed their flights due to traffic delays. The event. But they did not want to be in the province did not have extensive experience

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with the operation of toll roads. competitively for all parts of the project rather Acknowledging that the agency was better than picking only the ones that had the equipped to carry out the project, the greatest profit potential. “We had to ensure provincial premier formally handed over competitiveness in the industry,” van Niekerk control of the R21 to SANRAL through a said. Tendering was the most important part memorandum of understanding. of the process, given SANRAL’s model and the The process of tendering for the Gauteng need to hire quality contractors who could work was consistent with SANRAL’s other deliver effectively and efficiently. Van Niekerk projects. “Whether it’s a small contract or a noted, “SANRAL is a management agency, big contract, the principles are the same,” van with a light structure, which means we are Niekerk said. In August 2006 the agency very dependent on appointing quality began an open tender process to appoint traffic contractors in order to ensure that we get the and toll consultants to do traffic modeling. required end result.” From the modeling they could decide how best Construction began in June 2008, just to toll the roads, targeting those areas with two years before the start of the World Cup, high congestion where toll facilities could and continued without major difficulties for 18 adequately fund the needed improvements to months. “In December 2009 everything was the infrastructure. They would then proceed on track, everything was on time,” van Niekerk with the tendering process for design said. “Then the rains started.” The rain consultants. “Traffic modeling was the main arrived in January 2010 and poured down input parameter for the design of the roads, until May. With twice the normal amount of the toll strategy and the financial model,” van rainfall, contractors struggled to meet their Niekerk said. They settled on an open-road milestones, especially given the dry conditions tolling model, with tolls charged using necessary for the final sealing stages of electronic transponders and camera roadwork. Construction continued during verification of registration plates. Open-road nights and weekends, with some contractors tolling allowed for multiple lanes to travel working 12 straight weeks without giving without the need to slow down at tollbooths. workers any off days. This increased the costs The upgraded Gauteng freeway was to be one to the contractors and increased the of the largest open-road tolling projects in the importance of the joint-venture partnerships world. with smaller contractors. In the end the Alli and van Niekerk were mindful that contractors met almost every milestone. Alli the scope of the project—185 kilometers for was quick to give credit to the contracting Phase 1 alone—might overwhelm South partners. “They did as much as was humanly Africa’s construction industry. After the possible for us to make sure that what we had standard prequalification process, SANRAL said to the people [came true],” he said. requested that large contractors form joint ventures with smaller ones. “A lot of skills ASSESSING RESULTS were transferred in this process,” van Niekerk The creation of SANRAL from South said. They divided the work into two bundles Africa’s Roads Department provided an of three projects each, with each project opportunity to increase efficiency within the covering a stretch of freeway. In order to road industry by separating government policy qualify, contractors had to tender for all three making from implementation and opening the packages in one of the two bundles. This tendering process to a wider range of ensured that contractors would bid contracting partners. SANRAL was able to

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remake the culture of procurement and The World Cup was a success for South reconfigure the financial model for roads Africa, and in its wake the construction infrastructure. During the first decade of the continued, with the final work on the first agency’s existence, its network more than phase nearing completion and plans in place doubled to 16,000 kilometers from 7,000 for the second phase. But in February 2011, kilometers. when SANRAL announced that tolling would Large projects like the Gauteng Freeway begin and that motorists could expect to pay as Improvement Project demonstrated the ability much as 66 cents (approximately 10 U.S. of the New Public Management model to cents) per kilometer, a public outcry arose. facilitate major infrastructure projects in tight Although few motorists would actually pay the time frames. Many individuals inside and maximum toll because of discounts and the outside of the agency questioned whether the graded system of charges, headlines total cost of the project, at 20 billion rand emphasized the maximum price. (about US$3.9 billion), could have been SANRAL had engaged in an “intent to reduced if the agency had allotted more time toll” process throughout the planning stages of or delayed construction until after the World the project, in which the agency sought to Cup. But the World Cup also acted as a communicate the details of the project, the catalyst that helped move the project forward. proposed toll locations and expected prices. The project gave smaller contractors and Public forums had offered local communities engineering companies a chance to pair with the opportunity to comment. But it was not larger firms and improve their skills and ratings until the final completion phases of the project as judged by the Construction Industry that taxi associations and workers’ unions Development Board, a statutory regulating and complained that tolling indiscriminately monitoring body. The project created 20,000 burdened an already disadvantaged segment of jobs during construction and an additional 900 the population. Radebe, the transport permanent jobs related to maintenance and minister who had signed off on the project in tolling. As the first 185 kilometers neared its early stages, had moved on to become the completion, another 375 kilometers remained minister of justice midway through the project. before SANRAL finished the entire upgrade, His replacement, Sbu Ndbele, met with offering the potential for continued Gauteng Premier Nomvula Mokonyane and employment opportunities throughout the agreed to suspend the tolling pending further construction industry. From an infrastructure review. standpoint, the new and expanded roadways The political impasse over tolling promised to improve traffic safety and reduce frustrated SANRAL leaders. Alli noted that congestion. in the past he had measured the success of his Though SANRAL did not officially projects by their completion. With the tolling complete the first phase of GFIP until the model, however, he now had to wait to see following year, the agency was able to halt whether the planned tariffs would be construction and open the roads in time for the implemented. “This is where you needed to games. Commuters experienced what project show firm political leadership,” he said. manager van Niekerk called a “traffic holiday,” “There is no political leadership. It is a as travel time between Johannesburg and problem for us. There is an issue of poor Pretoria shrank dramatically. “People were leadership.” raving on the radio about how many hours they That the agency went through all of the were saving,” he recalled. communications channels with the “intent to

© 2011, Trustees of Princeton University 11 Terms of use and citation format appear at the end of this document and at http://www.princeton.edu/successfulsocieties. Richard Bennet Innovations for Successful Societies toll” process and yet still met public outcry general of transport, agreed. “The agencies suggested that the government needed to have been more or less successful. SANRAL is spend even more effort on the public relations clearly a standout success compared to the aspects of the Gauteng project. The others and the reason is very simple; it’s a guy difficulties also spoke to the challenges of called Nazir Alli. If you don’t get the right operating in a political environment with management, these things don’t work,” he said. frequent changes in top management. From Separating the agency from the 1994 to 2011 the Department of Transport department allowed Alli and his team to had six directors general and four ministers. manage projects with more efficiency and Even though the SANRAL model provided effectiveness. SANRAL was effective in its the sustainability needed for extensive primary goal of improving roads for the people strategic planning, the turnover within the of South Africa. Paying for the new roads department undermined the consistent through toll collection, however, remained an political support that large projects require obstacle because of the added costs to drivers. from start to completion. Though the expansion and upgrading of roads had the potential to increase economic REFLECTIONS opportunities for the historically By 2011, the Department of Transport disenfranchised, South Africa struggled to had created a total of 11 agencies responsible implement tolling in an effective and fair for the management of various sectors of South manner so as to benefit the entire population. African transportation. Many within the “I think South Africa, whether one is department, including Jeremy Cronin, the talking transport or pretty much anything else, deputy minister of transport, noted SANRAL’s is still sharply marked by duality,” Cronin said. success. Cronin noted the importance of “The strange combination of a relatively leadership within the agency. “Someone like advanced first world side-by-side a very Nazir Alli is obviously a very effective significant third world, to use metaphoric leader…[He] is very technically competent as language. … The danger is that we perpetuate well, and is not just a political appointee this first world/third world duality. … We’ve managing an agency with a CEO title. … He got a very efficient, first class operation in has actually brought professional skills to bear SANRAL which has ensured that we retained on the challenge of constructing and and even extended this wonderful first world maintaining our national road network.” freeway network system we’ve got. … When Cronin said. you toll in South Africa, you’ve got to think Ketso Gordhan, the former director about what you’re doing.”

1 Briefing by the Minister for Transport, Mac Maharaj. (February 16, 1999). 2 “R11,5bn Gauteng roads project to help keep SA’s economic hub on growth path,” by Chanel de Bruyn, Engineering News Online

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